Three textile raw materials and their manufacture — Reading Companion

erican cotton on a large scale in Turkestan only some twenty years ago, and bids fair to become a large producer. The plant is indigenous to almost all the Central and South American countries, and particularly in Mexico, Brazil and Peru, it has great potentialities. Peru has two kinds of native cotton known as the rough and smooth varieties. The former is of a very long and tough fibre and is valuable because it can be blended with wool.

[Sidenote: _American Varieties_]

The greatest part of the American crop consists of the Upland variety, although, as we have noted, there is a small but important crop of Sea Island in the Southern Atlantic states. Another long staple species, known as Pimas, has recently been introduced in Arizona, and the alluvial soil of Mississippi, Arkansas, and Louisiana has produced still other desirable species, locally known as “Rivers,” “Peelers,” and “Benders.” Before we consider the relative manufacturing merits of the various kinds of cotton, it would perhaps be well to consider briefly how the crop is grown.

[Sidenote: _Growth of the plant_]

The cotton season of course varies in different latitudes, but the planting is done everywhere in the early spring months. The proper care and fertilization of the soil and its preparation to receive the seed is of the utmost importance. The plant ripens in about four months, so that the picking season in this country usually begins in August, and continues until the first killing frost. From the time of the opening of the first bolls the cotton continues to grow, unless killed by drought or insects, until the cold puts a stop to vegetation, and the same stalk frequently contains ripe and immature cotton at the same time. The cotton which matures first and has been least exposed to weather when picked is likely to be freer of spots and discolorations than that which is picked at the end of the season.

[Sidenote: _Enemies of the plant_]

[Sidenote: _The Boll Weevil_]

The two great enemies of the cotton plant are drought and insect depredations. Late frosts and the right quantity of rain and sunshine are what every cotton planter prays for, and praying is about all he can do in this respect. Not so, however, with insects. Unfortunately there are a great number of rapacious little creatures rendered particularly hardy by some caprice of Nature, to whom the growing cotton plant represents an especial delicacy. Against them the planters, under the guidance of the Department of Agriculture, are waging continuous warfare. It is said that insect depredation, at pre-war prices cost the country an annual sum of $60,000,000, more than half of which is attributable to the two worst offenders, the boll weevil and the boll worm. Coming in hordes across the Mexican border, the boll weevil has destroyed millions of bales of cotton annually, and as yet no very effective remedy has been found to exterminate it.

[Sidenote: _Weather Defects_]

Even at that, however, the planter’s greatest worry is perhaps not so much the growth as the harvesting of his crop. To get his cotton picked rapidly and properly, an operation for which no successful machinery has yet been devised, and to have it properly ginned, presents his chief problem. If cotton is left too long on the stem it will be exposed to the detrimental effects of the weather. Coloring matter from the newly opened bolls, or from the soil, is washed into the floss by the rain, and while such spots or stains may be bleached out by the sun, the lustrous bloom never returns. Frost will make permanent tinges or stains, and the wind will frequently wrap the pendulous locks of fibre-covered seed about the stems of the plant or tangle them up in the leaves.

[Sidenote: _Careless Picking_]

[Sidenote: _Bad Ginning_]

When the pickers do not exercise proper care stem and leaves frequently get picked along with cotton, and a considerable quantity of dirt inevitably finds its way into their bags. Or else the cotton may be picked when it is damp, with the result that the teeth of the gin, instead of picking out the seeds and stems will cut the matted fibres, producing a class of cotton known as “Gin-cut”. Moreover the gin brushes will be unable to separate the matted tufts, and so they go into the bale as “naps” or “neps”. All these factors militate against the planter in his efforts to have his crop classified as high as possible.

4. GRADES AND STAPLES

[Sidenote: _Grades Based on Condition_]

The classification of cotton into the standard grades fixed by the Government constitutes an exceedingly difficult art. There is absolutely no mechanical basis, and the classification is a purely relative one. The kind of plant has no bearing whatsoever, nor has the length or strength of staple. It is really a distinction based upon the condition of the cotton, rather than upon its inherent attributes.

The grade “MIDDLING” is the basis upon which the market values of the other grades are quoted. There are eight full grades:

[Sidenote: _The Full Grades_]

_Fair_ _Middling Fair_ _Good Middling_ _Middling_ _Low Middling_ _Good Ordinary_ _Ordinary_ _Low Ordinary_

[Sidenote: _Tinges and Stains_]

[Sidenote: “_Points_”]

Between these full grades are the half grades, known as the Stricts, and some classers use quarter grades with which, however, we shall not concern ourselves here. The grades and half-grades are quoted for whites, tinges, and stains. A stain is a heavy discoloration while a tinge is a lighter hue, and partial discolorations, known as spots, are permissible in the lower grades of whites. The values of the various grades are always quoted as so many points on or off White Middling, a point being 1/100th. of a cent. Thus, if Middling White were quoted at 24c and Ordinary as 300 points off, it would mean that Ordinary was worth 21c. An example is given below of a regular quotation sheet.

U. S. GRADES [1]WHITE [2]TINGES [2]STAINS

Middling Fair 403 on Nominal Nominal Strict Good Middling 328 on 49 off a Nominal Good Middling 253 on 152 off a 447 off a Strict Middling 135 on 300 off a 618 off a Middling Basis 456 off a 809 off a St. Low Middling 305 off 704 off a Nominal Low Middling 843 off 1064 off a Nominal Strict Good Ordinary 1230 off Nominal Nominal Good Ordinary 1518 off Nominal Nominal

[1] U. S. Government differences.

[2] Average of differences on New York, New Orleans, Memphis and either the Savannah or the Augusta exchanges.

[Sidenote: _The Human Element_]

[Sidenote: _Proportion of Impurities_]

It is obvious that in this classification the human element plays a great part. The difference between quarter grades, or even half grades, or between a tinge and a stain, are subject to a great variety of interpretations. While there is no definite standard, Middling must be cream or white, must show no soil evidence, no gin-cuts or naps, may have a few pieces of leaf (not powdered), and a few motes, (immature seeds). As the grades go up the cotton must be freer of impurities until the top grades have to show practically a perfect lustrous, silky, white, and clear fibre. On the lower side the impurities increase, until, in the Ordinaries, we find large and small leaf particles, sticks, hulls, dirt, sand naps, gin-cuts, and spots, together with a dingy color.

[Sidenote: _Some Cottons not Sold on Middling Basis_]

It is this classification that governs the trading on all the exchanges, and upon which the planter originally sells his crop. The exceptions are those varieties of cotton which are distinct from the crop as a whole. Sea Islands are sold as Fancy, Choice, Fine, Medium, and Common. Bolly or immature cotton is sold by separate agreements; and Linters, the fibres regained by the seed mills from reginning the seed, are not sold on this basis. Neither is what is known as the “City Crop” of loose cotton accumulated from taking samples, sold in this way.

[Sidenote: _Staple Length_]

Aside from grade there are two other qualifications which are of equal importance to the manufacturer: length, and strength. Lengths are quoted in eights of an inch, and cotton under 1⅛” is termed short, while that over 1⅛” is long. The normal lengths run from ¾” to 1⅞”, and it is noteworthy that, where a normal difference between grades would be 25 points, the difference of ⅛” would be about 250 points. “Pulling” for staple is another art where the individual’s judgment plays an important part.

[Sidenote: _Elasticity_]

Strength,—elasticity and tensile strength,—is again one of the mill’s prerequisites. The usual buyer’s test for fibre vitality is to compress a sample in the hand to see if it will return to its former shape. The importance of length is that it governs the fineness of the yarn to be spun, while grades affect the finish of the cloth. We shall see later that mills cannot buy mixed lots, but must have even-running grades of fixed staple.

5. BUYERS OF RAW COTTON

[Sidenote: _Storekeepers as Local Buyers_]

The small planters of the South are usually unable to finance themselves independently through the growing and picking seasons. Consequently the local store-keeper, from whom the planters buy their supplies, usually extends credit in the form of an open account and so becomes the first middleman. Not infrequently the store-keeper will accept cotton rather than money in settlement of his accounts, and where he follows this practice he becomes what is known as a local buyer. When he has accumulated sufficient cotton he sells either to an intermediate buyer, or to the buyer for some merchant or mill.

[Sidenote: _Large Growers_]

In the case of the larger grower, or the syndicate of growers, the local buyer is usually eliminated. These planters obtain their credit from the large merchant buyers, who in turn are carried by their banks.

[Sidenote: _Intermediate Buyers_]

Very frequently the local buyers are scattered so thickly through a neighborhood, and each accumulate such small and heterogeneous lots of cotton that an intermediate buyer finds his way into the natural order. Sometimes the intermediate is merely a “scalper” who buys from the local dealer and sells to merchant buyers. In other cases, notably in Texas, he acts as a concentrating agent, buying at local points from growers and selling, usually at compress points, to representatives of merchants or mills. In the latter case he is referred to as a “street buyer.”

[Sidenote: _Financing Early Stages_]

Where the grower surrenders his cotton to the local dealer the latter usually has it ginned, but in cases where the planter is able to finance himself he takes his cotton to the gin himself, pays for the ginning, and either sells in so-called gin bales, (before they are compressed) or, if a warehouse is available at the gin or compress point, holds his cotton until he can obtain a satisfactory price for it. The local banks perform a very important part of the crop financing at this stage, for, since the grower sells for cash, the buyers require advances. These are made by the Southern banks against buyers’ tickets, showing cotton purchased, against gin receipts, warehouse receipts, compress receipts, and finally when the cotton is shipped, against bills of lading.

[Sidenote: _The Merchant Buyer’s Importance_]

[Sidenote: _The Take-up Man_]

The large cotton merchants fulfill a very essential function in that they are responsible for the concentration of the raw material and for its redistribution into the proper channels of manufacture. They maintain branches and representatives throughout the entire cotton growing areas and are directly connected by wire with all the important exchanges. By far the bulk of their buying is done after the close of the New York Exchange from local and intermediate buyers who during the day have been acquiring mixed lots of all sorts. The merchant’s representative, known as the take-up man, goes over and classifies the cotton accumulated by the local buyers, takes a sample from each bale which he tags with a duplicate of the shipping tag he places on the bale itself, and then ships the cotton to the concentration point and the samples to the office at that place. He pays the local buyer by draft or check.

[Sidenote: _Even-running Lots from Compress Point_]

The office at the concentration point, usually where there is a compress, has in the meantime received instructions from the head office as to how to make up the various lots. As the bales are compressed they are collected into even-running lots of certain grades for which the head office has received inquiries from mills, and are shipped out in this way. The branch office will ship according to instructions forwarding the bills of lading with invoices and sight drafts to the head office or to some bank.

[Sidenote: _Cooperative Marketing_]

Since the war, and particularly in the last three years, the co-operative movement has in some sections developed to such an extent as to supplant in large part the old system of marketing. In Texas, Georgia, and other States, a large part of the crop is now concentrated, financed, and sold through these extensive organizations of growers either direct to mills, or to large merchants and exporters.

Almost all cotton is bought on Middling Basis, but some is taken on sample with guarantees, (often a dangerous practice for both parties), and some is taken at a fixed price per bale.

[Sidenote: _Direct Buying_]

A few Southern mills buy direct from nearby growers, but the preponderant majority and practically all the Northern mills obtain their cotton through merchants, or through brokers representing Southern merchants.

We have seen briefly how the cotton is grown and brought to market, but we have still to consider the all important question of what determines the price at which it changes hands.

6. THE COTTON EXCHANGES

[Sidenote: _“Spot” and “Futures”_]

[Sidenote: _The Great Markets_]

Cotton trading falls roughly into two categories: trading in cotton for immediate delivery, or spot cotton; and buying or selling for delivery at some future time. Purchases or sales of spot cotton mean that cotton actually will be delivered from vendor to purchaser, but, as we shall see, trading in futures does not necessarily mean that the contract will be fulfilled by delivery. The great cotton markets are New York, Liverpool, New Orleans, Bremen, and Havre. Of these New York is almost entirely a futures market, while New Orleans is chiefly a spot market. Liverpool, Bremen, and Havre trade in both spot and futures, but Liverpool is the European centre for trading in future contracts.

[Sidenote: _The New York Cotton Exchange_]

Only about 2% of the annual crop is sold spot in New York, and yet it is the prices on the New York Cotton Exchange which govern very largely the price paid to the grower in the South by the various buyers. The New York Exchange is the barometer of the American, and to a large extent, of the world’s cotton trade, because its mechanism works out the equilibrium between demand and supply; and as this mechanism consists chiefly of the trading device called the “Hedge”, we shall digress for a moment to consider its operation.

[Sidenote: _The “Hedge”_]

We might say that hedging is an insurance against fluctuations in cotton prices by purchase or sale of future contracts for cotton against sale or purchase made for actual delivery. It consists of nothing more than of neutralizing the gain or loss which will result from existing delivery contracts if the price rises or falls before delivery date, by creating an off-setting loss or gain.

[Sidenote: _As Used by the Merchant_]

Assume, for instance, that a merchant makes a contract with a mill in July for 100 bales October delivery. He sells at the current price of let us say 30 cents per pound plus his overhead and profit. In due course he will obtain his cotton from the South, but in the meantime he covers, or hedges his contract by buying 100 bales of October futures on the Exchange. If he has to pay the grower 31 cents for the cotton which he has sold to the mill for 30 cents, he will on the other hand, be able to sell his future contract which he bought at 30 cents for 31 cents, so that the loss on one is neutralized by the gain on the other. Vice versa, he will lose whatever _extra_ profit he might have made from a falling price.

[Sidenote: _By the Manufacturer_]

In the same way a manufacturer may buy futures against orders he has accepted for goods, based on the price he expects to pay for his cotton. Or he may sell futures to protect himself on cotton he has bought but has not yet covered by cloth contracts. Hedging by manufacturers, however, particularly in the North, is not a common practice, because the cloth market is not elastic enough to follow accurately in the wake of cotton prices, and also because the mill treasurer rarely wants to hedge cotton in his warehouse, preferring to rely on his own judgment in matters of purchase.

[Sidenote: _By the Grower_]

Occasionally a grower may find it to his advantage to hedge his crop. If, for example, he is satisfied in August that the present price for December is likely to be higher than he will obtain later, he may sell December futures for a conservative percentage of his crop, thereby guaranteeing himself against a drop.

[Sidenote: _Speculation_]

By far the greatest part of the future trading, however, is done by merchants, because they are actually engaged in the business of selling cotton which they have not yet acquired or of carrying cotton for which they have no contracts. Speculation, of course, enters into the dealings on the exchanges as an important economic factor, in normal times tending to stabilize by discounting future trends, but in periods of extraordinary demand or supply frequently causing violent fluctuations in prices. At such times there is always a good deal of agitation for preventive legislation, but it is unlikely that dealing in futures will ever be prohibited by law. The present regulations of the large exchanges eliminate abuse as far as possible, and the futures markets are really a factor of safety for the entire industry.

[Sidenote: _The Dissemination of Quotations_]

All the large merchants, as we have seen, have branch offices in the South, and all these offices have wire connections with the chief markets. On the basis of the Liverpool quotations and the New York opening prices the head offices will send out to their branches and representatives their daily limits, above which they are instructed not to buy. Inasmuch as most of the small growers are dependent for their news of the markets upon the buyers, they are at somewhat of a disadvantage, but the keenness of competition prevents their exploitation by unscrupulous buyers.

[Sidenote: _New York Cotton Contract_]

A contract on the New York Cotton Exchange calling for the delivery of 100 bales specifies Middling grade, but the seller may deliver any grades which are tenderable by the Exchange regulations. These grades are from Strict Low Middling to Middling Fair, but if tinged, not below Middling Tinged. Stains are not tenderable. The grades are determined and settlement made on the basis of so many points on or off Middling, which, as we have seen, is the basis for all quotations.

[Sidenote: _Buying Season_]

It is evident that mills, which require certain even-running grades, could of course never buy their cotton on the Middling basis. For this reason, except in the few cases where they buy direct from the growers, mills purchase their requirements from dealers on the basis of samples. Selling to mills, as opposed to selling M/B, is known as selling on merit. Mills usually begin to buy in September and fill about 60% of their year’s requirements by January. Those manufacturers who use the high grades usually buy earliest because of the limited crop from which they must obtain their share. Cotton is ordinarily shipped soon after purchase and stored not by the merchant but at the mill. The recent growth of Southern warehouse companies, however, has caused mills to carry less cotton than formerly. Mills ordinarily pay for their cotton in three days.

We have now traced rapidly how the cotton is grown and marketed, and our next concern will be to follow what happens to it during the process of making it into goods. Deferring for the moment consideration of cotton export from the United States, we shall proceed in Chapter Two, to glance at the various aspects of Cotton Manufacture.

THE MANUFACTURE OF COTTON

1. HISTORY IN THE U. S.

Much has been written on the subject of the textile industry and perhaps even more still remains to be said. It is not the object of this brief survey to present a complete picture of all the stages of manufacture, but rather to place briefly before the reader a necessarily kaleidoscopic view of the various processes.

[Sidenote: _Slater’s Mills_]

[Sidenote: _Whitney’s Gin_]